Is Obama A Cost-Containment Wimp?

March 1, 2010

Washington Post editorial page editor Fred Hiatt devotes most of his column today to showing that President Obama cares a lot about covering the uninsured. He then lands at the conclusion that this goes to show Obama doesn't really care about controlling costs:

In helping to shape and reshape the bill, Obama has stayed true to the goal of improving access. But his new entitlement is "paid for" by wishing away costs and wishing into the future taxes and unpopular reforms that he can't bring himself to embrace now.

This is an odd accusation for several reasons. First, Hiatt is obviously referencing the delayed implementation of the excise tax on high cost health plans, but it's flatly untrue to say that Obama "can't bring himself to embrace" it. Anybody who's followed coverage of this issue, including in the WashingtonPost, knows that Obama desperately wants an excise tax. It's Congress that can't bring itself to embrace it right away.

Second, it's true that Obama has been forced to agree to a delay in the implementation of that tax. But in its place he's proposed another new tax, which would extend the Medicare tax to capital gains income over $250,000 a year.

Which brings us to the third point. Hiatt uses scare quotes around the term "paid for." Yet nowhere in his column does he provide his reasons to doubt that the new health care entitlement is paid for. The column devotes nearly all its space to demonstrating that Obama cares a lot about covering the uninsured, which is true. But it hinges upon a completely unsupported assumption that caring about covering the uninsured means you're the sort of soft-headed liberal who will create an entitlement that isn't paid for.

Part of the answer is that the revenue that Obama loses from delaying the excise tax is made up for with a new tax on the wealthy. And many centrists are highly skeptical of such proposals. They believe that ultimately it won't be enough to just tax the wealthy. (I agree.) Their skepticism runs to such lengths that they almost seem to believe that revenue from taxing the rich is imaginary. Of course, Hiatt doesn't quite put it that way. But since the argument for his skepticism about the fiscal soundness of Obama's plan is almost entirely implied, we have to fill in the holes in Hiatt's logic as best as we can.

Hiatt proceeds to argue that Obama's mixed signals about health care -- He wants more coverage! He wants cost containment! Which is it? -- account for public skepticism:

And a public that is confused about reform's purpose is also -- as the Republicans never tired of pointing out on Thursday -- increasingly less enthusiastic.

Perhaps so. I have to think that another factor is that Obama has endured the political pain of finding offsets to pay for his coverage expansion, which has cost him both among the public and dragged out the process in Congress, where every dollar of cost saving is like pulling teeth. Meanwhile, pundits have endlessly flayed him for his supposed profligacy, leading to a situation where the public overwhelmingly believes reform will add to deficits, despite strong evidence to the contrary. The lesson here is that the safest political path, if not the best way to advance the national interest, is to go the George W. Bush route of adding a new entitlement and not even pretending to pay for it.